Commentary for Tuesday, April 7, 2015 – Gold closed down $8.00 on the Comex today at $1210.60 – weaker as the dollar reasserted itself in late trading. The Dollar Index was relatively flat on the open but eventually traded higher as Europe returned from the Easter holiday and traders pushed the euro lower.
The Dollar Index closed yesterday at 97.06 and traded today between 96.93 and 97.94 with a reading at 97.86 as of this writing – so we are at the higher end of today’s range and this renewed strength is surprising.
Gold was also in a nice short-term profit position as gold moved from roughly the $1180.00 to solidly above $1210.00 in early April trading. So profits were booked and the long trade got a bit more defensive. Generally speaking however the technical picture for gold remains positive since the $1150.00 bottom seen in mid-March – so the bulls may be biding time. Price movement here might be tricky as a move below $1200.00 might signal the end to recent strength – especially if the dollar continues to gain strength.
Today’s gold close ($1210.60) was slightly under its 100 Day Moving Average ($1211.84). Watch this metric closely because it’s important to momentum players.
World gold production in 2014 was at 3114 tons; however 10% of that production was unprofitable. Eleven of the largest producers lost 6.9 billion dollars mining gold in 2014 – that compares to a respectable $11.3 billion profit in 2010. So while gold prices were increasing mine exploration and production money was readily available – now some mining operations have cut production and exploration because it does not pay.
We kindly note that Kitco has adopted our Friday’s customer survey with a new on line twist – brilliant minds think along the same lines.
Silver closed down $0.27 at $16.82 in another day of quiet trading.
Platinum was off $6.00 and palladium was unchanged at $768.00.
This from FX Empire – Greece Reemerges in Headlines Following Weak NFP – Monetary policy will remain a major focal point this week in the wake of the much weaker than expected U.S. jobs report. First and foremost, the small increase in nonfarm payrolls pretty much assured the markets that the FOMC won’t hike rates as soon as June, and will likely delay action until September at the earliest. Meanwhile, central bank meetings highlight this week. On tap are the BoE, BoJ, RBA, RBI, and the BoK.
Greece also remains in the spotlight. Athens has submitted no fewer than four different reform proposals. Each has successively been larger and more detailed. The official creditors think more concessions can be made. While the pressure on the new government remains intense, the ECB is drip-feeding authorization for increased ELA funds.
In this game of brinkmanship, it is in the interest of both sides to claim a brink is at hand to try to force the other into new concessions. Some Greek officials have emphasized the week ahead is such a brink. There are two key events. First on April 8, Greece will auction 6-month T-bills. Greek banks can only buy a limited amount, given the restrictions on what they can do with ELA funds. Greek officials appear to be hoping from additional good will gestures by China and, perhaps, Russia.
Second, on April 9, Greece has a 360 million SDR payment due to the IMF. Greece has a currency mismatch and the euro’s depreciation the past year has increased the cost of servicing its debt. The 5% appreciation over the past couple of weeks is a small consolation. There have been some threats that Greece would not make the payment. This is part of the brinkmanship tactics.
I publish the following from time to time – it’s from an old engineering buddy I went to school with during the last ice age. Worth the read if you think the world is getting too complicated or suspect we burn up a great deal of your money on government overage.
Discovery of New Element – a major research institution has recently announced the discovery of the heaviest element yet known to science. This new element has been tentatively named “Administratium”.
Administratium has 1 neutron, 12 assistant neutrons, 75 deputy neutrons and 111 assistant deputy neutrons, giving it an atomic mass of 312. These 312 particles are held together by a force called morons, which are surrounded by sycophanions and vast quantities of lepton-like particles called peons.
Since Administratium has no electons, it is inert. However, it can be detected, as it impedes every reaction with which it comes into contact. A small amount of Administratium may cause any reaction over 4 days to complete, when it would normally require less than a second.
Administratium has a normal half-life of 3 years; it does not decay, but instead undergoes a reorganization, in which a portion of the assistant neutrons and deputy neutrons and assistant deputy neutrons exchange places.
In fact, Administratium’s mass will actually increase over time, since the reorganization causes some morons to become neutron forming isodopes. This characteristic of moron-promotion leads some scientists to speculate that Administratium is formed whenever morons reach a certain concentration which is referred to as “significant quantity”. This hypothetical quantity is known as “Critical Morass” and you will know when you see it.
The walk-in cash trade was steady most of the day but the phones were on the slow side.
The GoldDealer.com Unscientific Activity Scale is a “ 4” for Tuesday. The CNI Activity Scale takes into consideration volume and the hedge book: (last Wednesday – 6) (last Thursday – 4) (last Friday – 3) (Monday – 4). The scale (1 through 10) is a reliable way to understand our volume numbers. The Activity Scale is weighted and is not necessarily real time – meaning we could be busy and see a low number – or be slow and see a high number. This is true because of the way our computer runs what we call the “book”.
Our “activity” is better understood from a wider point of view. If the numbers are generally increasing – it would indicate things are busier – decreasing numbers over a longer period would indicate volume is moving lower.
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